Veterans Help Make San Diego a Hub for Start-Ups

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Katie Rast, a founder of Fab Lab, a San Diego nonprofit, with Alan McAfee, a former Navy corpsman who created an entrepreneur-in-residence program there.CreditCreditAdam Fedderly for The New York Times

By Eilene Zimmerman

Dec. 14, 2016

SAN DIEGO — For decades, politicians lobbied to bring military bases to their districts for one reason: jobs. A base is akin to a corporate headquarters, bringing with it jobs in related businesses.

Here, the high concentration of military bases has turned the region into a growing entrepreneurial hub for veterans.

About 229,000 military veterans live in San Diego. The 100-mile radius supports more military and Coast Guard personnel than any other metropolitan area in the country, according to the Department of Defense.

Many of San Diego’s veterans start companies that function as contractors and suppliers to the military because of their contacts and security clearances.

Sumner Lee, a former Navy helicopter pilot who also spent several years working for the Space and Naval Warfare Systems Command, or Spawar, in San Diego, leveraged his experience to help start Fuse Integration in 2010. Fuse, a design engineering firm, focuses on networks and software. Its software tool allows the Navy to monitor network systems on its ships, Mr. Lee said. Revenue, which he said is under $10 million, grew 35 percent in the past year.

According to research from the United States Small Business Administration, veterans are 45 percent more likely to be self-employed than those without active-duty military experience.

“If you look across all sectors of San Diego’s economy — life sciences, telecom, biotech, health care, I.T., sports innovation, medical and wearable devices, clean tech — you will find entrepreneurial hubs,” Mr. Cafferty said. “Over time, growth has transformed our region’s economy into a diverse mix of high-growth industries, some with direct ties to defense technology. This can be largely attributed to the veterans who stay here.”

Yet veterans still face some daunting challenges in transitioning from the military to private-sector entrepreneurship. To address those issues, several groups have set out to help veterans navigate the complexities of starting a small business.

“When you’re starting a brand-new business and you don’t have any type of business track record because you’ve been serving in the military, it’s very hard to get a loan or find investors,” he said. “If you are starting a company that’s directly connected to the experience obtained while you were in the military, then you have a network to tap. But if you want to open a Subway, that’s a totally different story.”

Veterans who aspire to be entrepreneurs often lack solid knowledge of the industry in which they want to operate, Mr. Figari said. Some, he added, may struggle to understand that as business owners, they will have several jobs, not one.

To address those challenges, nonprofit groups and former service members have created programs to give veterans the training they need. Mr. Figari’s group, for instance, provides general entrepreneurship training to veterans in eight counties in Southern California.

Other groups offer more extensive training, like the Rosie Network, a nonprofit that helps small businesses in San Diego started by veterans or their spouses. This year, the Rosie Network opened the Military Entrepreneur Development Center, an accelerator program for entrepreneurs who are on active duty, are veterans or are spouses of military personnel. It also offers Service2CEO, a free, 12-month small-business development program.

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Isaac Wang’s start-up company, War Foodie, sells specialty coffee and coffee presses. It was inspired, he said, by the “really bad” coffee he had in the Navy.CreditAdam Fedderly for The New York Times

Nick Norris, a former member of the Navy SEALs, went through the Rosie Network’s training after leaving the military in 2013.

His experience in the Navy led him to help found Predator Warpaint, a camouflage paint with sunscreen protection. The SEALs, along with members of other military branches, train outdoors using camouflage face paint, but military-issued sunscreen “is a rarity,” Mr. Norris said.

Predator Warpaint adopted technology often used in the surfing industry — a sport that defines San Diego’s beach culture — and created a camouflage paint that contains SPF 50 sunscreen. The Rosie Network, Mr. Norris said, helped his company make critical connections for building sales channels to the military and to hunters, who buy it online. A Kickstarter campaign raised $30,000 in seed money.

Rather than finding investors or securing a loan, Isaac Wang, a former surface warfare officer in the Navy, chose to finance his start-up, War Foodie, which sells specialty coffee and coffee presses, himself.

The inspiration for it came from his experience in the Navy. “The coffee is really bad,” Mr. Wang said. His company, now two years old, sells its wares in both military and expat communities globally.

Many of those leaving the service, however, may not know if they are suited to run their own businesses.

The Honor Foundation helps veterans address that question in its 15-week program, which trains and prepares former Navy SEALs to either start their own companies or to get a job. One-third of the Honor Foundation’s graduates trained as entrepreneurs, said Joe Musselman, the organization’s founder.

One of them is Charles Matranga, who finished the program in June. Mr. Matranga was a member of the Navy SEALs for 26 years. During that time, he handled a host of business issues, including managing budgets, people and capital. Now, he said he is “translating those skills into corporate America skills.”

This year he helped start Exitus Technologies, which makes a wearable security device that can connect its user to a network of friends and emergency medical workers with the push of a button.

Many of San Diego’s ex-military personnel have found a home in the tech sector, which also dominates the region with companies like Qualcomm, Sapphire Energy and General Atomics. These kinds of technology ventures need engineers, especially electrical, aerospace and communication engineers, who are plentiful in San Diego.

“It’s a good talent pool for us,” said Josh Wells, a former Navy pilot and a founder and chief executive of Planck Aerosystems, which created a technology that enables unmanned drones to take off and land autonomously from a moving vehicle onto a ship. So far, Planck has raised $1.9 million in seed funding.

Alan McAfee spent seven years as a Navy corpsman before being discharged in 2007 because of an injury. Mr. McAfee learned about Fab Lab, a nonprofit community space in San Diego’s Makers Quarter that gives members access to tools, technology and training for digital fabrication.

There, he created an entrepreneur-in-residence program in which participants collaborate and support one another. In exchange, they volunteer at least five hours per week at the lab. About 20 percent of Fab Lab members are active-duty military or veterans.

“There is something interesting about the intersection of the maker movement and the veteran population,” said Katie Rast, a founder and the director of Fab Lab. “I think there is a call to action that really speaks to those who have served, knowing you have been the creator of something that has use in the world.”

It was at Fab Lab that Mr. McAfee got to know the founders of Robo3D, a 3-D printing company. He then joined the company about 18 months ago as a partner and vice president of engineering.

The company has just raised a second round of funding and is preparing for an initial public offering. “I love working with start-ups,” Mr. McAfee said. “The intensity, the pace, the flexibility and how competitive it all is.”

Correction:

An article on Thursday about an increase in start-ups run by veterans in San Diego misstated part of the name of a federal agency. It is the Small Business Administration (not Association).

A version of this article appears in print on , on Page B11 of the New York edition with the headline: San Diego, With the Help of Veterans, Becomes a Hub for Start-Ups. Order Reprints | Today’s Paper | Subscribe